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Windows 8: Microsoft’s Big Bet

Companies will likely be slow to adopt the new operating system, analysts say.

Sporting a radical redesign that’s expected to charm some and disappoint others, Microsoft’s new Windows 8 faces a tough slog ahead, including a slow adoption rate, some analysts say.

“The challenges of a new user interface, a complex set of processor choices and a long ramp to a compelling set of app offerings in the Microsoft Store will translate to a slower-than-usual Windows upgrade cycle,” says Frank E. Gillett, an analyst with Forrester.

Gillett is lead author of a report that predicts a grim outlook for Windows 8 next year but concludes that long term, Microsoft could restabilize market acceptance of its Windows product line with the right moves.

Microsoft is betting big on the new operating system (OS), which for the first time is driven by touch-screen controls. The change makes Windows much easier to use on smartphones and tablets. But on traditional desktops, the new interface comes across as clunky and inefficient, say many early adopters.

“This common design language is being used across all of Microsoft’s products and services, including Xbox and Bing,” Gillett says. “To run existing Windows desktop apps and to access some systems settings and features, users will switch to ‘desktop mode.’ This dual personality will likely confuse many users, at least at first."

“Although Forrester is encouraging enterprises to look at Windows 8 in all use cases, the new Windows 8 UX Start screen is prompting concerns about the need for extensive employee training,” he adds. “Having finally migrated to Windows 7 in significant numbers and released their death grip on Windows XP, many enterprise IT shops are content to stand pat.”

Microsoft CEO Steve Ballmer sees things differently: “We have re-imagined Windows, and the result is a stunning lineup of new PCs. Windows 8 brings together the best of the PC and the tablet.”

Microsoft is putting significant marketing muscle behind the rollout, including the release of its own Microsoft-manufactured tablet for Windows 8, the Surface. “We decided to do Surface because it's the ultimate expression of a Windows PC for us,” says Steven Sinofsky, president of Microsoft’s Windows Division. “It’s an extension of Windows. It’s a stage for Windows.”

Microsoft partners are releasing their own studies indicating more user enthusiasm than others have found. PC Helps, a Microsoft gold-certified partner, for example, says 25% of companies with 500 or more employees anticipate migrating to Windows 8, according to its Windows Pulse Survey. And 17% of those employers said they expected to start migrating to Windows 8 as soon as the OS was available.

In addition to facing initial resistance from desktop users, Windows 8 is in need of "cool." Currently, it’s all too fashionable for some consumers to bash anything new from Microsoft while genuflecting at the altar of all things Apple.

An Associated Press/GfK poll conducted prior to the release of Windows 8 last month found 52% of the 1,200 people surveyed were not even aware that Microsoft was releasing a new OS. Moreover, 61% of those who were aware of Windows 8 expressed little or no interest in the software. And only 35% of those in the know thought Windows 8 would be an improvement over previous versions.

That’s a far cry from new releases of Apple iPhones and iPads, which generate news stories about hordes of diehard Apple fans camping out for days to snatch the latest version of their digital nirvana.

Other market factors outside Microsoft’s control may make Windows 8 a tough sell. “PCs are going through a severe slump,” says Jay Chou, senior research analyst at IDC, a market research firm. “The industry had already weathered a rough second quarter, and now the third quarter was even worse. While ultrabook prices have come down a little, there are still some significant challenges that will greet Windows 8 in the coming quarter.”

A sluggish economy continues to drag on the market as well. “Businesses have slowed their refresh cycle as they remain concerned about the broad economic outlook,” says David Daoud, a research director at IDC.

While it’s sobering news for Microsoft, the challenging outlook for Windows 8 is celebrated by others. They see the anticipated resistance to Windows 8 as a resounding confirmation that Microsoft’s often stultifying monopoly over the personal computing market—which has lasted for decades—has finally been crushed.

Essentially, personal computing has evolved from a desktop-only affair into a decidedly on-the-go market, they say, where Microsoft faces two formidable competitors—Apple and Google—two "it" companies that also have smarts and very deep pockets.

“Early adopters will jump at Windows tablets,” Gillett concludes. “Beyond that, individuals will be slow to adopt. Windows will ramp in 2014, gain almost a 30% share of tablets by 2016, but will miss out on phones.”

Joe Dysart is an Internet speaker and business consultant based in Manhattan.

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